Madam Chair, let me first thank the many members for their speeches. As I was listening to them, I had generally two reactions. First, I was thankful that members were supportive of the need for defence, for across the aisles, regardless of political affiliation, (including) Non-constituency Members of Parliament (MP) and Nominated Members of Parliament. My second reaction was one of agreement with almost all points brought up by Members of Parliament here. And if you listen to their speeches, it was a tour de force of the changing security environment - how the world is indeed unpredictable, how new threats are on the horizon, and even upon us. And yet, because we are under pressure with increased need to spend, how can Singapore and the Singapore Armed Forces (SAF) respond to these threats? So there is total agreement with what they said. Their speeches capture the essence of a new security environment for which Singapore and Singaporeans must indeed prepare for, and for which the SAF must adapt, to protect our sovereignty and defend our home. Mr Cedric Foo and Dr Teo Ho Pin spoke about this. We talked about the 3rd Generation transformation for a number of years, but a new environment is upon us.

Like Members here, we recognise that this year is a very special year. We commemorate 75 years since the Fall of Singapore, and 50 years of National Service (NS). Together with all Members of Parliament here, we want to thank the more than one million committed National Servicemen who have done their duty faithfully and built a strong SAF to protect Singapore and Singaporeans these past decades. But even as we laud their individual contributions, I agree with Members here that the SAF must now undertake critical steps to better protect Singapore in this new security environment. As we did for the 3rd Gen SAF transformation efforts, the SAF must once again transform to the Next Gen SAF to be better positioned for the future, and major parts of my speech will focus on this.

I agree with MPs here that the world indeed is at an inflexion point. Interview any world leader now and he will say so. Even if world leaders do not say so, our citizens can feel the turbulence, the change to come. What's happening? The last 25 years, after the Cold War, were marked by rapid globalisation and relative peace despite the threat of extremist terrorism, which we do not underplay. This relative peace was so much so, that militaries in the European Union (EU) physically downsized. I remember when I first visited the German Ministry of Defence, the Bunderswehr (German Armed Forces) was talking about a one third reduction in size, a significant reduction. There were good reasons. They wanted to reap the peace dividend of a united Europe against what was perceived to be a declining Russia. In Asia, it too was a good three decades.

China's economy grew for thirty years phenomenally, at an average of 10% every year! India's economy also grew, albeit at a slower rate of about 6% per annum over a similar period from 1979 for thirty years. This massive growth lifted all boats in the global economy, particularly for Asia, including ASEAN, which grew at an average of 6% per annum, well above the global average of 4%.

That era, we are witnessing, is now changing trajectory, as the benefits of globalisation have not been uniform either within or across countries. The so called "ills" of globalisation related to migration and job disruption have eroded popular support in many countries, never mind the benefits of hundreds of millions lifted out of poverty.

Instead of the optimism and hope that greeted the end of the Cold War, uncertainty prevails today. There is uncertainty about what "America First" means for global leadership and trade, especially if the erstwhile or the current global leader of global trade is not part of the Trans-Pacific Partnership; uncertainty in Asia over how the US-China strategic rivalry will impact Asia and us, as many Members have said before me, especially the pressure on small states like Singapore to choose sides. Across Europe, still reeling from the global financial crisis in 2008, there is uncertainty about the security threat against some of its members. There is even concern over the existence of the EU itself, especially when far-right parties that push for the equivalent of Brexit, are gaining ground.

Many Members have reflected these uncertainties, including Assoc. Prof Fatimah Lateef who asked whether we were vulnerable. Indeed we are vulnerable. We should accept that the geopolitics will be turbulent and that Singapore has to prepare for choppy waters. At the same time, our national strategy to deal with this uncertainty is still sound. It is a simple strategy. One based firstly on a strong SAF supported by Total Defence, which we have, with your support, steadily invested resources into every year. Secondly, as Members here have mentioned, including Mr Pritam Singh, good relations with our neighbours coupled with very strong partnerships with like-minded countries. Some of you have asked how our relations are with our immediate neighbours, including Mr Singh, and I will tell you that generally they are excellent. Indeed, we cooperate on many fronts. The Malacca Straits Patrol, which was mentioned, marked its 10th anniversary last year. There continues to be solid support for the Five Power Defence Arrangements, now into its 46th year. The 18-nation ASEAN Defence Ministers Meeting (ADMM) - Plus has made good progress, with many working groups dealing with different security challenges. Mr Singh asked whether we should have more platforms (for cooperation with our neighbours). We are open to them. Anything that improves military-to-military cooperation, we will undertake. But we have to understand that in some aspects we wait to be invited. For example, for the new Sulu Sea Patrols, we have already availed our resources from our Information Fusion Centre in Changi Naval Base to the Sulu Sea Patrols, because that is part of our interests. And for other initiatives, we will lean forward if other countries want (us) to participate further.

We signed an enhanced Defence Cooperation Agreement with the US in 2015 and the Comprehensive Strategic Partnership with Australia last year. Our bilateral relations with China and India have also grown. In 2014, Members will remember that General Chang Wanquan and I agreed on a "Four Point Consensus" in which we affirmed principles and substantive steps to strengthen our bilateral defence cooperation. For India, Minister Manohar Parrikar and I also signed the revised Defence Cooperation Agreement in 2015, and we are now exploring stepping up collaboration in areas such as maritime security and counter-terrorism.

These strong partnerships stand us in good stead, but ultimately it is the Next Gen SAF's primary mission and responsibility to deal with security threats in this 21st century. As Members here have said, we know that it is truly in our court that the SAF must stand ready, and I agree with you. This includes the threat of cyber-attacks and fake news. Two years ago, I brought up the issue of hybrid warfare at the Committee of Supply debate. It was not a very much bandied word. In fact, it was a very uncommon word. But today, as I listen to your speeches, it has become so common, so well-known only in a short space of two years. So the threat has progressively risen. I just came back from the Munich Security Conference, and there, Chancellor Merkel stated openly that some countries considered hybrid warfare to be legitimate. She is not wrong. Last week, the Financial Times had a full write-up on cyber warfare. Let me quote a salient paragraph:

"Russia's military does not tend to talk of cyber warfare, as the West does, in tightly proscribed, legally measured actions, but rather discusses the broader concept of an information war - a concept that precedes the Soviet era - in which the toolkit has been brought up to speed for the digital era...the Russian Defence Minister confirmed the existence of "information troops", rumoured for years but long denied by officials. "Propaganda must be smart, literate and effective," he told the Lower House of Parliament. Russia spends $300 million annually on its "Cyber Army" of about 1000 people, according to the Kommersant newspaper (their local newspaper)."

(This is the) head of the German government, telling (us) that the countries around them consider this legitimate. (Other) Defence Ministers are coming out openly to say that "this is part of my Orbat (Order of Battle) and part of my mission". They talk openly about the doctrine, training and execution of cyber-attacks. Russia is not alone, as other countries too have reported to have cyber battalions, even cyber divisions in their military and ministries. I agree completely with Members here that the Next Gen SAF needs to prepare for this environment where state-orchestrated cyber and information campaigns against another state are not only considered legitimate, but can be ongoing all the time. The impact of that threat can have real and damaging physical consequences. Let me give you some examples.

Ukraine's power grid has been hit by several cyberattacks, and one such attack in December 2015 cut off power to an area about 20 times the size of Singapore - and this was in the middle of winter. Estonia, a small nation of about 1.3 million people, whose people and government understand this threat particularly well because they have been the target of well- orchestrated cyber-attacks for the last decade since 2007. So much so that the Estonian government plans to make a digital copy of the entire nation - everything from birth records, property deeds, bank data, all government records. They want to do this and store it in another location, a secure location in UK or Luxembourg! Why do they want to do this? Just imagine. We have 850 (people's) personal information stolen. Suppose somebody burrows (into) Central Provident Fund records, death and registry records, housing records, and demolishes them, there will be utter chaos for any nation.

Even elections can be influenced by orchestrated cyber-attacks. The Democratic National Committee was hacked in the last US Presidential Elections, and thousands of documents (were) released by unknown sources meant to discredit their candidate. The Financial Times article alleged that the Russians had already compromised the servers of political parties in France and Germany, (both of which) were going to have elections. And nearer to home, members here have mentioned Indonesia, that fake news in Indonesia had inflamed ethnic and political tensions. And Indonesia responded by establishing an agency to counter cyber-crime and fake news. Our best defence against this information warfare is Total Defence, which has stood the test of time. I will leave it to Senior Minister of State for Defence Dr Maliki to elaborate on how we need to update and refresh Total Defence and respond to these hybrid threats.

But modern militaries can no longer choose to ignore these external threats through the digital front. We would be silly to do so and derelict in our responsibility. As it happens, MINDEF recently disclosed a breach in our I-net system. But it is not a surprise, it is no revelation when I tell Members here that we can expect more such cyber-attacks in the future. The potential of the cyber threat was recognised early, which is why even from inception, for the SAF, our classified and operational networks were separated from the Internet since we had those systems. We understood it. But the threat is now material and even greater, and I agree completely with you that the SAF will need to step up its cyber defences even as the level threat increases. Mr Cedric Foo asked pointedly how we are going to combat these new threats. So, in a clear and un-mitigated recognition that the cyber domain is the battlefield today, MINDEF and the SAF will stand up a new cyber command. It will be called the Defence Cyber Organisation (DCO) and placed at the highest level of our organisational hierarchy. This new cyber command will be led by a Deputy Secretary. It will comprise four major formations, each commanded by at least a Colonel or flag officer (General or Admiral) within MINDEF and the SAF. The cyber command will oversee policies, train cyber units to monitor and defend our networks 24/7 from threats, and will assess vulnerabilities, detect attempted intrusions and breaches in the system. The SAF must keep up with the tactics and operations of aggressors in the cyber realm, something which Dr Teo Ho Pin spoke about, and because this is a never-ending game, as we do in conventional warfare.

In the steady state, the DCO will have about 2,600 soldiers, supported by scientists and engineers in Defence Science and Technology Agency (DSTA) and DSO, and this is a significant build-up from the current numbers and reflects the importance of this new battlefront. So in response to members here, this is a clear signal. We agree with you, MINDEF and the SAF will step up.

Some Members have asked, and yes, national servicemen will also be trained in vocations for cyber defence - it would be silly for us not to as they are our main resource. And just as security troopers now physically protect key installations, we will deploy these NS cyber defenders to protect our installations together with the Cyber Security Agency. Second Minister for Defence Mr Ong Ye Kung will elaborate on this.

Some Members, including Madam Jessica Tan, have asked about technology and how we will deploy resources. Modern militaries are powered by technology - there is no running away from it, especially so for Singapore. As Members rightly pointed out, we will see a fall in manpower. Our defence technology organisations will gear up to support these changes.

Mr Vikram Nair asked about our STEM recruitment efforts - Science, Technology, Engineering and Mathematics. You are quite right. We have now a 5,000-strong and growing community of defence engineers and scientists. We will increase such scholarships and awards by 40% by 2025 - up to 170 from 120 today. The pinnacle Public Service Commission (PSC) Scholarship (Engineering) within MINDEF will be awarded this year.

Two new labs will be set up so that we can focus our efforts. Many of you have talked about leveraging technology, which I completely agree with. DSO will set up the robotics lab. DSTA's new lab will exploit artificial intelligence and data analytics. We will give these two new labs a seed grant of $45 million annually as a start, so that they can lead in more experimentation and innovation. We are at the frontal edge of this and it is not as if you can buy commercial software easily, so you will have to invest resources to kick-start the process.

The work on robotics has already begun. 6 Singapore Infantry Regiment soldiers are currently experimenting with unmanned aerial and ground vehicles to perform their missions. The Navy has gone further. The Navy is putting Unmanned Surface Vehicles which can navigate and avoid collisions autonomously into operations. Let me make this clear, it is not a remote-controlled device, it is an autonomous device. The SAF, working with the Ministry of Home Affairs, has already developed countermeasures to potential drone attack - this is something that Ms Joan Pereira asked about. We recognise this threat. This is a real threat. We are monitoring these developments in Iraq and Syria. But we are not taking it lightly, and in fact this is an issue that is discussed at the Security Policy Review Committee which is chaired by Deputy Prime Minister Teo. Whether you know it or not, in the last National Day Parade that was held in the National Stadium, these systems were already deployed - not only to detect, but (also deliver) counter-measures. Laws, as you will remember, were recently enacted by this House, and legislation was gazetted so that we can have these powers.

The Analytics and Artificial Intelligence Lab will exploit the mega-volumes of real time information that can be derived from the Internet of Things and platforms. We have many platforms and I agree with you we are vulnerable. But we need to exploit (our platforms) because the realisable potential is enormous. Let me give you just one example. Every single day, there are about 1,500 commercial ships that ply our waters. And the Singapore Maritime Crisis Centre uses a particular programme with Artificial Intelligence embedded to generate unique signatures for each of these vessels in our waters. These individual signatures are collated from multiple sources, which include social media, and other specific information. They are collated, scanned, made sense of, fused to give one picture. It then detects deviations from this signature. This AI-embedded method detected a possible ISIS supporter on board a tanker that was in our waters in 2015. So among all the ships, among the tens and hundreds of thousands of occupants, cargo, they detected a possible ISIS supporter. That person was barred from disembarking in Singapore. Finding this needle in a big haystack is only possible through modern means.

I believe that Singapore can lead in defence technology even though we are small. So to achieve that aspiration, DSTA together with our national universities, A*STAR (Agency for Science, Technology and Research), government agencies like GovTech (Government Technology Agency of Singapore), Cyber Security Agency of Singapore, National Research Foundation, the Singapore Economic Development Board, will host an inaugural Singapore Defence Technology Summit in 2018. I asked staff whether there were any global defence summits in the world. They said that there weren't any, and I replied, "That is good, let us try". This Summit will provide a global platform to invite luminaries, leading figures, to come share their views. It will give us a window into the future. Not only that, it allows opportunities to network and increase our access to new ideas and innovation. Because you and I know that for defence, for us, it is existential - we need to deploy technology because other factors are working against us.

But even as we set up a new cyber command and technology labs, even as we host the inaugural Singapore Defence Technology Summit, I agree completely with Dr Teo Ho Pin that we must never neglect to train the SAF as a conventional force against traditional threats and, as Mr Cedric Foo pointed out, terrorism. Many of you agree with that.

We all know that we have finite land, so we are building training facilities overseas, such as in Australia when we signed the Comprehensive Strategic Partnership. But at the same time, we must have world-class training facilities here. Mr Vikram Nair talked about his childhood memories and how the old camps are being redeveloped. There is finite land, we understand the pressures. But we do need training camps, and we must maximise what we have. And we must guard against over-dependence on overseas training grounds. Recent events have pointed out the dangers. And it is not possible for all our NSmen to only train overseas because the bulk of our training is still conducted here, especially for our Army.

Many of you here who have done NS will be familiar with the SAFTI Live Firing Area. You and I remember charging up Peng Kang Hill and being trained at FOFO hill. These are all in our memories. But SAFTI Live Firing Area was built in the 1960s, 50 years ago, and as Members here have pointed out, the SAF has changed, cities have changed, terrain has changed, the world has changed. And Members here asked, "How is the SAF going to respond to this, is there a new tactic, is there a new doctrine, are there new equipment?" We recognise these, and not only do we need all these - the answer to their questions is yes - we will need training grounds that reflect the missions and operations that the SAF will be called to conduct. So for the SAF to train realistically and effectively, we will build a new SAFTI City. Because, even peacekeeping and Humanitarian Assistance and Disaster Relief (HADR) missions are likely to be conducted in built-up cities and infrastructure.

The new SAFTI City will take a decade to complete and cost approximately $900 million.

There are many details, but let me give you the broad gist. The idea of the new SAFTI City, what it wants to accomplish, is to allow any battalion to fight across different terrains successively as they would do in real life missions. So it will therefore have both urban and conventional terrain. And in the urban setting, low houses, high-rise buildings. In the open terrain, jungles, hills and rivers to cross. But the signature change, because we are using technology, will be state-of-the-art training simulation technologies designed into operating environments. Because we are building it from scratch, we can do it. There will be interactive targets, battlefield effects such as artillery attacks, so that our soldiers can train more realistically and get feedback about how well they performed. When it is completed, SAFTI City will take our NS training onto a much higher level of realism and effectiveness.

So for instance, for our soldiers who are involved in Island Defence operations, this SAFTI City will allow them to train in a mock-up petrochemical complex, warehouses, container parks and industrial buildings. Sector 2 will have high-rise and inter-connected buildings, basement carparks, a bus interchange and an underground MRT station, which will be useful for Counter Terrorism and High Intensity Urban Operations, as Members talked about. Sector 2 will also include urban rubble for HADR Operations.

In the areas surrounding SAFTI City, there will be three new Instrumented Battle Circuits and this will help small units train up their fighting skills because there will be video cameras, data analytics to point to what a specific person did or did not do, and it will give feedback on each soldiers' performance. Different scenarios can be configured for both peace-time contingency and conventional military operations.

Ms Low Yen Ling asked how the SAF is going to meet its needs with prudent defence spending, and she is absolutely right. We are aware of the budgetary pressures from an aging society, coupled with slow growth rates for the economy. And as I have sketched out to Members here, all these new programmes will need significant and sustained resources over the medium term. It cannot be built in five years, it will take as many as 10, 15, maybe even 20 years to fully build up the Next Gen SAF. We will re-prioritise programs to meet the challenges that we must face. Here, I am thankful for MPs who have supported us over the years, so that we can spend steadily on our defence budget, on our Orbat and platforms continually, which today allows us to grow in new areas which we did not foresee 10 or 15 years ago. So the Army's refurbished Leopard tanks and Terrexes are young. The Belrex Protected Combat Support Vehicle was introduced last year. The Next Generation Armoured Fighting Vehicle will be rolled out in 2019. The Air Force will upgrade its F-16s with new radars and weapons, and later this year, we will take delivery of our first ASTER-30 missile system which will strengthen our air defences. The Navy has new Littoral Mission Vessels and will need to replace two of its Archer Submarines. We will announce the replacement for these submarines later this year.

So we have been able to do all this because every year we commit to a sizeable proportion of defence spending, but steadily, no sharp dips, no sharp rises. Even with the new demands that I have sketched out for the Next Gen SAF, MINDEF has projected that our defence budget can be maintained on the current trajectory of 3 to 4% growth each year, which would allow us to at least keep pace with inflation. MP Low Yen Ling made a very incisive comment that our region, Asia's military spending, has outstripped that of EU, and has an average growth of 5.4%. Our 3 to 4% is below that, but because we have had a longer runway of steady spending, we can keep to our 3 to 4% projection. But MINDEF will not hesitate to push for higher spending if there are increasing new demands or if the security environment deteriorates.

MINDEF and SAF are conscious that the Government, with the strong support of Singaporeans, invests substantially into the defence budget each year. And I want to thank MPs and Singaporeans for their constant support and promise you that we will stretch each defence dollar to the fullest. Where we can, we will cut costs, as some of you have asked, and we did it through the Republic of Singapore Navy Frigate's new Ship Management System. This new system reduced maintenance time by 93%, and saved us $40 million. Another example is the Army's new SMART Magazine. NSmen here will know that we fire blanks for various reasons, but someone thought "why have blanks, why not have a magazine that can simulate a blank", which is what the SMART Magazine does, and it will save $1.4 million each year. These measures, big and small, reflect a culture of prudence, using innovation to cut costs without any loss of effectiveness for the SAF.

Madam Chair, let me conclude and allow Second Minister for Defence Mr Ong Ye Kung and SMS Dr Maliki to address queries that are not addressed, that the Members have brought up in their speeches. The SAF will develop Next Gen capabilities to deal with threats in both the real world and cyber space. I want to end with a quote which Dr Goh Keng Swee said in his last major public speech. He said "The most dependable guarantee of our independence is a strong SAF. A strong SAF, in turn, depends on the political will to make the effort and pay the price." I think Dr Goh's reminder is timeless. Whether we were a poor country as a new nation having to spend on defence, or as an up-and-rising country with other needs, and now having to face an ageing society with an uncertain world. At each step you need to invest in defence and you need political will. I want to thank the strong commitment of our national servicemen, the unwavering support of the Members of this House, and the unshakeable resolve of Singaporeans. And with these elements, the SAF stands ready as guardians of the peace and defenders of our way of life.